The Australian Senate Economics References Committee is analysing whether the regulation of co-operatives and mutuals is appropriate and fair.
Last month the Committee held its third public hearing where it heard evidence from representatives of the Australian Securities and Investments Commission (ASIC), the Australian Tax Office (ATO) and the Australian Competition & Consumer Commission (ACCC).
During two previous hearings last year the committee examined duplicative practices, red tape and inconsistencies in the way that co-operatives and mutuals are regulated.
“There are many aspects of the legislative and regulatory frameworks that govern co-ops that are antiquated and inappropriate,” said Melina Morrison, chief executive of the Business Council of Co-operatives and Mutuals.
“The inquiry is a chance to look at the urgent reforms needed to free up the operating environment for co-operatives so that they can compete on a level playing field with other businesses.”
“It should not be more difficult to set up and run a co-operative than any other form of business
She also highlighted the important role of co-operatives and mutuals in the country’s economy. “They bring much needed competition to markets, provide transparent and accountable pricing and return all profits to the local economy in which they operate.”
The committee received 59 submissions from the public, including the co-operative and mutual sectors. One of these came from the National Health Co-op, a consumer co-operative that provides affordable and accessible health services to the local community where it operates. NHC plans to expand nationally over the next five years. The co-op highlighted two barriers preventing it from continuing to grow: limited availability of capital to sustain its rapid growth and shortage of suitably qualified doctors in Australia. The NHC has addressed this barrier through collaborative partnerships with local businesses and grants from the government. However, the co-op argued in its submission that the government could play an important role in facilitating access to capital for the sector through retargeting existing grants programmes or establishing favourable loans for community based organisations.
“It should not be more difficult to set up and run a co-operative than any other form of business. Mutuals especially are not well served by the Corporations Act,” Ms Morrison added.
“They cannot raise capital to fund innovation and growth with the same flexibility as other forms of business. In the end this institutional bias means less diversity of business models in the economy. Failing to raise capital to fund growth can open the door for a mutual to be demutualised which leads to a loss of the member benefits and community ownership model unique to mutuals.”
In this article
- Australian Competition & Consumer Commission
- Australian Securities and Investments Commission
- Australian Senate Economics References Committee
- Australian Tax Office
- Business Council of Co-operatives and Mutuals
- Melina Morrison
- Social Issues